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Vanguard's 2021 Outlook At A Glance

The Blue Water Team

The COVID-19 pandemic will continue to affect the global economy and overall investment picture for 2021. Vanguard's look at the coming year acknowledges both the long-term impacts of the pandemic, and the growth that should occur in light of the vaccine and economic growth. 

Global Economic Growth

The advent of the COVID-19 vaccine and the renewed willingness of people to buy and sell as the world gains control over the pandemic mean that the global economy should experience steady growth over the course of the year. This growth will not reach pre-pandemic levels in 2021 but should lay a foundation that will lead to pre-pandemic levels past this year. 

Long-Term Effects of COVID-19

While the effort to control the pandemic will eventually succeed, COVID-19 will likely have long-term effects on the economy and investments. In particular, we can expect to see the following changes remain:

  • Accelerating of digitalization
  • Acceleration of the development of a global economy
  • Changes in the role of government in daily life

Areas likely to remain unchanged because of the pandemic include the following: 

  • U.S.-China relations
  • The use of innovation to increase economic productivity

Uneven Economic Growth

Throughout 2021, economic growth will not proceed at the same pace everywhere in the world. For example, China is likely to grow about 9 percent, in part because they are one of the only nations to have already gained control over the pandemic. 

As they work toward controlling the pandemic with the promise of effective vaccines, the United States and Europe may grow about 5 percent in 2021. In the U.S., inflation may reach close to 2% from its pandemic low of 1%. 

Emerging marketing may not return to pre-pandemic levels until 2023 and will likely demonstrate the most uneven growth of all global areas.